[Federal Register Volume 71, Number 184 (Friday, September 22, 2006)]
[Notices]
[Pages 55427-55429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-8067]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 04-BIS-21]


In the Matter of Mohammad Al-Mashan Group, Jleeb Asoukh 
Commercial Area, Alwaha Complex, First Floor <greek-i>1, Safat, Kuwait 
and P.O. Box 5909, Safat 13060 Kuwait, Respondent; Decision and Order

    In a charging letter filed on October 25, 2004, the Bureau of 
Industry and Security (``BIS'') alleged that Respondent, Mohammad Al-
Mashan Group (``MAMG''), committed two violations of the Export 
Administration Regulations (``Regulations'') \1\, issued under the 
Export Administration Act of 1979, as amended (50 U.S.C. app. Sections 
2401-2420 (2000)) (the ``Act'').\2\
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    \1\ The charged violations occurred from 1999 through 2000. The 
Regulations governing the violations at issue are found in the 1999 
through 2000 versions of the Code of Federal Regulations (15 CFR 
Parts 730-774 (1999-2000)). Actions taken during this administrative 
enforcement proceeding are governed by the Regulations in effect at 
the time such actions take place.
    \2\ From August 21, 1994 through November 12, 2000, the Act was 
in lapse. During that period, the President, through Executive Order 
12924, which had been extended by successive Presidential Notices, 
the last of which was August 3, 2000 (3 CFR, 2000 Comp. 297 (2001)), 
continued the Regulations in effect under the International 
Emergency Economic Powers Act (50 U.S.C. Sections 1701-1706 (2000)) 
(``IEEPA''). On November 13, 2000, the Act was reauthorized and it 
remained in effect through August 20, 2001. Since August 21, 2001, 
the Act has been in lapse and the President, through Executive Order 
13222 of August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), which has 
been extended by successive Presidential Notices, the most recent 
being that of August 3, 2006 (71 FR 44,551 (August 7, 2006)), has 
continued the Regulations in effect under IEEPA.
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    Specifically, the charging letter alleged that during the period 
between on or about October 27, 1999 and on or about February 23, 2000, 
MAMG engaged in conduct prohibited by the Regulations when it 
transferred an uncooled infrared camera, an item subject to the 
Regulations and controlled on the Commerce Control List for national 
security reasons, to an individual from the United Arab Emirates in 
violation of a BIS license condition. The BIS license that authorized 
the export of the camera from the United States to MAMG prohibited the 
resale, transfer, or reexport of the camera to anyone other than the 
approved end-users on the license without prior authorization by the 
U.S. Government. In transferring the camera to a non-approved end-user 
without prior U.S. Government authorization, MAMG committed one 
violation of Section 764.2(a) of the Regulations.
    The charging letter further alleged that during the period on or 
about October 27, 1999 and on or about February 23, 2000, MAMG 
transferred an uncooled infrared camera, an item subject to the 
Regulations and controlled on the Commerce Control List for national 
security reasons, to an individual from the United Arab Emirates with 
knowledge, or reason to know, that a violation would subsequently occur 
in connection with the item. Specifically, at the time MAMG transferred 
the camera, it knew, or had reason to know, that the BIS license 
authorizing the export of the camera from the United States to MAMG 
prohibited the resale, transfer, or reexport of the camera by MAMG to 
any entity other than those listed on the license as approved end-users 
without prior U.S. Government authorization. In transferring the camera 
with such knowledge, MAMG committed one violation of Section 764.2(e) 
of the Regulations.
    In accordance with Section 766.3 of the Regulations, on October 25, 
2004, BIS mailed the notice of issuance of the charging letter by 
registered mail to MAMG at its last known address. The charging letter 
was returned to BIS unopened. As stated in the ALJ's Recommended 
Decision and Order, although service of the notice of issuance of the 
charging letter by registered mail did not result in actual delivery of 
the charging letter, MAMG constructively refused delivery of the 
charging letter when it was served in accordance with Section 766.3 of 
the Regulations but returned to BIS as undeliverable. To date, MAMG has 
not filed an answer to the charging letter with the ALJ, as required by 
the Regulations.
    In accordance with Section 766.7 of the Regulations, and because 
more than thirty days had passed since delivery of the charging letter 
was constructively refused, BIS filed a Motion for Default Order on 
July 19, 2006. This Motion for Default Order recommended that MAMG be 
denied export privileges under the Regulations for a period of ten 
years. Under Section 766.7(a) of the Regulations, ``[f]ailure of the 
respondent to file an answer within the time provided constitutes a 
waiver of the respondent's right to appear,'' and ``on BIS's motion and 
without further notice to the respondent, [the ALJ] shall find the 
facts to be as alleged in the charging letter.''
    On August 30, 2006, based on the record before him, the ALJ found 
MAMG in default, and issued a Recommended Decision and Order in which 
he found that MAMG committed one violation of Section 764.2(a) and one 
violation of Section 764.2(e) of the Regulations. The ALJ recommended 
the penalty of denial of MAMG's export privileges for ten years.
    The ALJ's Recommended Decision and Order, together with the entire 
record in this case, has been referred to me for final action under 
Section 766.22 of the Regulations.
    I find that the record supports the ALJ's findings of fact and 
conclusions of law. I also find that the penalty recommended by the ALJ 
is appropriate, given the nature of the violations, the lack of 
mitigating circumstances, and the importance of preventing future 
unauthorized exports.
    Based on my review of the entire record, I affirm the findings of 
fact and conclusions of law in the ALJ's Recommended Decision and 
Order.
    Accordingly, it is therefore ordered,
    First, that, for a period of ten (10) years from the date this 
Order is published in the Federal Register, Mohammad Al-Mashan Group, 
Jleeb Asoukh Commercial Area, Alwaha Complex, First Floor <greek-i>1, 
Safat, Kuwait and with an address at P.O. Box 5909, Safat 13060 Kuwait 
(``MAMG''), its successors and assigns, and when acting for or on 
behalf of MAMG, its representatives, agents, assigns and employees 
(``Denied Person''), may not, directly or indirectly, participate in 
any way in any transaction involving any commodity, software or 
technology (hereinafter collectively referred to as ``item'') exported 
or to be exported from the United States that is subject to the 
Regulations, or in any other activity subject to the regulations, 
including, but not limited to:
    A. Applying for, obtaining, or using any license, License 
Exception, or export control document;
    B. Carrying on negotiations concerning, or ordering, buying, 
receiving, using, selling, delivering, storing, disposing of, 
forwarding, transporting, financing, or otherwise servicing in any way, 
any transaction involving any item exported or to be exported from the 
United States that is subject to the Regulations, or in any other 
activity subject to the Regulations; or

[[Page 55428]]

    C. Benefitting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the Regulations, or in any other activity subject to the Regulations.
    Second, that no person may, directly or indirectly, do any of the 
following:
    A. Export or reexport to or on behalf of the Denied Person any item 
subject to the Regulations;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by the Denied Person of the ownership, possession, or 
control of any item subject to the Regulations that has been or will be 
exported from the United States, including financing or other support 
activities related to a transaction whereby the Denied Person acquires 
or attempts to acquire such ownership, possession or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from the Denied Person of any item subject to 
the Regulations that has been exported from the United States;
    D. Obtain from the Denied Person in the United States any item 
subject to the Regulations with knowledge or reason to know that the 
item will be, or is intended to be, exported from the United States; or
    E. Engage in any transaction to service any item subject to the 
Regulations that has been or will be exported from the United States 
and that is owned, possessed or controlled by the Denied Person, or 
service any item, of whatever origin, that is owned, possessed or 
controlled by the Denied Person if such service involves the use of any 
item subject to the Regulations that has been or will be exported from 
the United States. For purposes of this paragraph, servicing means 
installation, maintenance, repair, modification or testing.
    Third, that, after notice and opportunity for comment as provided 
in Section 766.23 of the Regulations, any person, firm, corporation, or 
business organization related to the Denied Person by affiliation, 
ownership, control, or position of responsibility in the conduct of 
trade or related services may also be made subject to the provisions of 
this Order.
    Fourth, that this Order does not prohibit any export, reexport, or 
other transaction subject to the Regulations where the only items 
involved that are subject to the Regulations are the foreign-produced 
direct product of U.S.-origin technology.
    Fifth, that this Order shall be served on the Denied Person and on 
BIS, and shall be published in the Federal Register. In addition, the 
ALJ's Recommended Decision and Order, except for the section related to 
the Recommended Order, shall be published in the Federal Register.
    This Order, which constitutes the final agency action in this 
matter, is effective upon publication in the Federal Register.

    Dated: September 18, 2006.
Mark Foulon,
Acting Under Secretary of Commerce for Industry and Security.

Recommended Decision and Order

    On October 24, 2004, the Bureau of Industry and Security, U.S. 
Department of Commerce (``BIS''), issued a charging letter initiating 
this administrative enforcement proceeding against the Mohammad Al-
Mashan Group (``MAMG''). The charging letter alleged that MAMG 
committed one violation of Sec.  764.2(a) and one violation of Sec.  
764.2(e) of the Export Administration Regulations (currently codified 
at 15 CFR Parts 730-774 (2006)) (the ``Regulations'').\1\ The 
Regulations are issued under the Export Administration Act of 1979, as 
amended (50 U.S.C. app. 2401-2420 (2000)) (the ``Act'').\2\ In 
accordance with Sec.  766.7 of the Regulations, BIS has moved for the 
issuance of an Order of Default against MAMG for failure to file an 
answer to the allegations contained in the charging letter issued by 
BIS within the time period required by law.
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    \1\ The violations charged occurred from 1999 through 2000. The 
Regulations governing the violations at issue are found in the 1999 
through 2000 versions of the Code of Federal Regulations (15 CFR 
Parts 730-774 (1999-2000)). Actions taken during this administrative 
enforcement proceeding are governed by the Regulations in effect at 
the time such actions take place.
    \2\ From August 21, 1994 through November 12, 2000, the Act was 
in lapse. During that period, the President, through Executive Order 
12,924, which had been extended by successive Presidential Notices, 
the last of which was August 3, 2000, 3 CFR, 2000 Comp. 397 (2001), 
continued the Regulations in effect under the International 
Emergency Economic Powers Act, 50 U.S.C. 1701-1706 (2000) 
(``IEEPA''). On November 13, 2000, the Act was reauthorized and 
remained in effect through August 20, 2001. Since August 21, 2001, 
the Act has been in lapse and the President, through Executive Order 
13,222 of August 17, 2001, 3 CFR, 2001 Comp. 783 (2002), as extended 
by the Notice of August 2, 2005, 70 FR 45,273 (Aug. 5, 2005), has 
continued the Regulations in effect under the IEEPA.
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A. Legal Authority for Issuing an Order of Default

    Section 766.7 of the Regulations states that BIS may file a motion 
for an order of default if a respondent fails to file a timely answer 
to a charging letter. That section, entitled Default, provides in 
pertinent part:

Failure of the respondent to file an answer within the time provided 
constitutes a waiver of the respondent's right to appear and contest 
the allegations in the charging letter. In such event, the 
administrative law judge, on BIS's motion and without further notice 
to the respondent, shall find the facts to be as alleged in the 
charging letter and render an initial or recommended decision 
containing findings of fact and appropriate conclusions of law and 
issue or recommend an order imposing appropriate sanctions.

15 CFR 766.7 (2006).
    Pursuant to Sec.  766.6 of the Regulations, a respondent must file 
an answer to the charging letter ``within 30 days after being served 
with notice of the issuance of the charging letter'' initiating the 
proceeding.

B. Service of the Notice of Issuance of Charging Letter

    In this case, BIS served notice of issuance of the charging letter 
in accordance with Sec.  766.3(b)(1) of the Regulations when it sent a 
copy of the charging letter by registered mail to MAMG at its last 
known address on October 25, 2005. After the letter was returned 
unopened, BIS sent a copy of the charging letter by registered mail to 
MAMG at its only other known address. That letter was also returned to 
BIS, but postage marks indicated that the letter had remained in Kuwait 
for approximately one month. Finally, in one last attempt to provide 
actual notice to MAMG, BIS mailed a copy of the charging letter to its 
last known address via Federal Express. The final letter was delivered.
    Although there is no evidence that the letters were actually 
refused by a representative of MAMG, MAMG is determined to have 
constructively refused delivery as of the date the notice sent out on 
October 25, 2004 was returned to BIS. I find that delivery of a 
charging letter is deemed constructively refused when the letter has 
been properly served at the respondent's last known address in 
accordance with Sec.  766.3 of the Regulations but has been returned to 
BIS as undeliverable. See In re Export Materials, Inc. (Docket No. 98-
BXA-09), 64 FR 40,820, (July 28, 1999) (Decision and Order); see also 
In re Modern Engineering Services, Ltd. (Docket No. 97-BXA-01), 65 FR 
81,822 (Dec. 27, 2000), (Decision and Order). BIS may legally pursue a 
default judgment against MAMB because more than thirty (30) days have 
passed without response from MAMG.

C. Summary of Violations Charged

    The charging letter issued by BIS included a total of two charges. 
Specifically, the charging letter alleged

[[Page 55429]]

that during the period between on or about October 27, 1999 and on or 
about February 23, 2000, MAMG engaged in conduct prohibited by the 
Regulations when it transferred an uncooled infrared camera, an item 
subject to the Regulations, to an individual from the United Arab 
Emirates in violation of a BIS license condition. The BIS license that 
authorized the export of the camera from the United States to MAMG 
prohibited the resale, transfer, or reexport of the camera to anyone 
other than the approved end-users on the license without prior 
authorization by the U.S. Government. In transferring the camera to a 
non-approved end-user without prior U.S. Government authorization, MAMG 
committed one violation of Sec.  764.2(a) of the Regulations.
    The charging letter further alleged that during the period on or 
about October 27, 1999 and on or about February 23, 2000, MAMG 
transferred an uncooled infrared camera, an item subject to the 
Regulations, to an individual from the United Arab Emirates with 
knowledge or reason to know that a violation would subsequently occur 
in connection with the item. Specifically, at the time MAMG transferred 
the camera, it knew or had reason to know that the BIS license 
authorizing the export of the camera from the United States to MAMG 
prohibited the resale, transfer, or reexport of the camera by MAMG to 
any entity other than those listed on the license as approved end-users 
without prior U.S. Government authorization. In transferring the camera 
with such knowledge, MAMG committed one violation of Sec.  764.2(e) of 
the Regulations.

D. Penalty Recommendation

     [REDACTED SECTION]

E. Conclusion

    Accordingly, I am referring this Recommended Decision and Order to 
the Under Secretary of Commerce for Industry and Security for review 
and final action for the agency, without further notice to the 
Respondent, as provided in Sec.  766.7 of the Regulations.
    Within thirty (30) days after receipt of this Recommended Decision 
and Order, the Under Secretary shall issue a written order affirming, 
modifying, or vacating the Recommended Decision and Order. See 15 CFR 
766.22(c).

    Done and Dated August 30th, 2006.

Joseph N. Ingolia,
Chief Administrative Law Judge.
[FR Doc. 06-8067 Filed 9-21-06; 8:45 am]
BILLING CODE 3510-33-M